Oil prices mixed on trade strains and production gains

Russia's oil minister said during the weekend the price of oil could dip into the mid $60 range at some point this year.

Major crude oil indices are moving in opposite directions as risk narratives diverge on either side of the Atlantic. File Photo by Monika Graff/UPI | License Photo

May 29 (UPI) -- Major crude oil benchmarks were spread by as much as 2 percent in early Tuesday trading as trade uncertainty balanced an expected increase in production.

Russian Energy Minister Alexander Novak said last week that parties to an effort steered by the Organization of Petroleum Exporting Countries may pull back from over-compliance in the second half of the year. Participating players, of which Russia is the largest non-OPEC member, are doing more than they need to under the terms of an agreement arranged in late 2016 and may come back toward 100 percent.

Speaking during the weekend, Novak said the price of oil might stay in a range between $65 per barrel and $75 per barrel for the year.

The price for Brent crude oil, the global benchmark, closed at $80.09 on May 17, its highest level in four years, in response to U.S. President Donald Trump's decision to pull out of a multilateral Iranian nuclear agreement. Since then, Brent has lost about 5 percent.

The situation was compounded last week on indications of a surge in U.S. exploration and production. More U.S. oil and more from OPEC producers would be reminiscent of a pre-2016 scenario when OPEC was defending a market share under threat from North American shale with robust output.

The price for Brent was up 0.97 percent as of 9:15 a.m. EDT to $76.05 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 1.13 percent to $67.11 per barrel.

WTI was pulled lower by the potential for an increase in U.S. oil production. Brent, meanwhile, was trending higher because of political risks in the European market.

"Shale oil production is giving WTI a false sense of security," Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, told UPI.

European stock indices were lower Tuesday on lingering political concerns in Italy, which may be facing repeat elections. Italian President Sergio Mattarella tapped former International Monetary Fund official Carlo Cottarelli to be interim prime minister Monday. That came after Giuseppe Conte, the populist prime minister-in-waiting, resigned over Mattarella's refusal to accept Conte's selection for finance minister in Europe's third-largest economy.

Elsewhere, oscillating trade tensions between the United States and China, the world's leading economies, tilted toward the warning sign again on Tuesday when Washington outlined sanctions measures that would go into force June 30.

"To protect our national security, the United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology," a White House statement read.

Crude oil prices lost nearly 2 percent on April 4 when China threatened $50 billion worth of U.S. imports with stiff tariffs.